When the AUD was higher than the USD, and gold at $1800, the price Australian producers were getting was around $1600 AUD. Now the AUD-USD has reversed, and the profit is around $1400. Gold has fallen $200 per ounce in real terms to Australian producers, or roughly 15 percent.
Looking at SLR, it went from a high of around $3.80 to today's price, a fall of around 90 percent.
I have been following SLR and the threads for the past year and I know some of the reasons - SLR share price got overheated, Murchison, two capital raisings, the all-in cost too high. Now these things have been dealt with and still the share price languishes.
I've also heard the supposed claim that gold is worthless and therefore not a viable investment. Tell that to the billions of people who like the shiny stuff, both as jewellery and for other decorations. And compare it to the prospering designer handbag industry, where a bag can cost thousands. People continue to pay premiums for luxury items and gold is the original luxury item.
All that is left is sentiment. I believe sentiment will turn slowly, if the gold price stabilises where it is currently. It will turn also as the company reports profits over the next year or two and the market becomes reassured that the measures management has put in place are working.
I hold SLR and am not bailing now. I'm not going to predict where it might go from here, except that I believe we've seen the low point and it's a slow road up from here.
SLR Price at posting:
44.0¢ Sentiment: Hold Disclosure: Held
